BSLAW Test 1
What application is required for creating a corporation? What is included within this document? What document is often issued following a successful application?
- Document called Articles of Incorporation - Must include: (1) corporate name, (2) number of shares of stock, (3) registered office and agent, (4) name and address of each incorporator - State will often issue a Certificate of Incorporation following a successful application
What does the discovery phase of pre-trail include?
- Document requests - Depositions - Third-party discovery (subpoenas for documents or testimony)
What are the duties of a general partnership pursuant to RUPA?
- Each general partner owes the following duties to the general partnership and to the other general partners... - (1) Loyalty: requires partners to hold partnership property in trust; cannot usurp partnership opportunities; cannot compete w partnership - (2) Care: must refrain from gross negligence, reckless conduct, intentional misconduct - (3) Good faith and fair dealing: partners may not engage in conduct designed to deny the partnership or the other partners what is due to them - Duties like these are sometimes called fiduciary duties
What does the presentation of evidence look like during a trial?
- Evidence is presented through lay (fact testimony) and expert witness (opinions are OK) - Direct and cross examination - Experts must be qualified (witness voir dire)
Corley v. Ott (and what was its effect?)
- Facts: Fred Ott and Charles Corley were partners doing business as "Lakewood Associates, a general partnership". Corley provided the capital to purchase the land to be sold by the partnership, called Lakewood Estates. Corley brought suit for the dissolution of the partnership, and Ott contended that his contributions of time in labor in improving Lakewood Estates should be credited to him as capital contributions in the distribution of assets. - Ruling: Judgment for Corley. There was no evidence of any agreement between the partners that Ott's services should be credited as capital contribution. Therefore, the value of the services could not be credited as capital contribution in the distribution of assets. - Significance: labor and time are not credited as capital contributions in distribution of assets of general partnership.
What are administrative agencies?
- Government bodies charged w administering and implementing legislation - Law governing these agencies is called administrative law - Senior officials typically appointed, not elected - Agencies help implement Congress' directives and help the president execute Congress' laws
What is the difference between member-managed and manager-managed LLCs?
- If LLC if member-managed, members have equal right to management + decisions are made by majority vote - Sometimes members delegate management to LLC managers - If LLC if manager-managed, all members do not have the right to manage - Managers can be members - Managers owe fiduciary duties
What are the rights of partners in a general partnership?
- Important rights of general partners (absent agreement to contrary) include... - (1) share in profits (default rule = profits are shared equally) - (2) equal role in managing business regardless of contribution - (3) inspection of partnership records
Who has the authority in a general partnership? What happens if there is a deadlock? What dictates the authority of the partners? What actions require express approval?
- In general partnerships with two or more general partners, a majority is required for decision-making - Action contravening partnership agreement require unanimity - Deadlock between even number of partners means no action can be taken - The scope of a partner's authority to act on behalf of partnership is dictated by the partnership agreement - Typ, partners may carry out normal functions of business BUT certain actions req express approval (cessation of business + discharging personal debts)
Kuslansky v. Kuslansky, Robbins, Stechel and Cunningham, LLP
- Issue: The case involved Phillip Kuslansky, the appellant, who initiated an action to recover damages for breach of contract. He alleged that the defendants failed to pay him the value of his interest in the partnership upon his withdrawal, as stipulated in the partnership agreement. - Ruling: the Court of Appeals clarified that this "liability shield" for general partners in a registered limited liability partnership pertains only to third-party liabilities, not obligations among partners themselves. Therefore, it does not protect a general partner from personal liability for breaches of obligations to each other within the partnership
What does jointly and severally liable mean? How does it compare to joint liability?
- Joint and several liability = any one general partner can be held liable for company debt - Joint liability = a company debt will be apportioned equally amongst the general partners (joint liability for contracts was in place under UPA)
What is jurisdiction? What are the different types of jurisdiction?
- Jurisdiction: The authority to hear a dispute - Personal jurisdiction: the power that a court has to make a decision regarding the party being sued in a case (based on whether a defendant is present within the forum or has minimum contacts with the forum) - Subject matter jurisdiction: the requirement that a given court has power to hear the specific kind of claim that is brought to that court
What are the basics of LLCs?
- LLC offers the tax benefits of a partnership (no double taxation) and the limited liability benefits of a corporation - LLC pays no federal taxes on its income as an entity - Most popular form of business entity in US - Only need one member but can have more
How does it work being an LLC owner? What are these owners called? What do they owe + contribute to a company?
- LLC owners are called members - Members are not personally liable on company's debts so long as they disclose that they are acting on behalf of an LLC - Members can run business but don't have to - Member contributions can be cash, property, services - Owe fiduciary duties
What must partners do internally to form a limited partnership?
- LPs need to have a Limited Partnership Agreement - RULPA embodies freedom of contract, very flexible - Typ drafted by general partners (courts typ interpret any ambiguities in LP Agreements against general partners) - LP Agreements can even "contract around" fiduciary duties
What are limited liability partnerships? What does their liability look like?
- Like LLC, LLPs provide the benefits of single taxation with limited liability - Partial shield against liability: partners are only liable up to their investment except they are subject to unlimited liability for their own wrongful acts and the wrongful acts of those they supervise (partners are shielded against liability for other partners' bad acts) - Limitation does not apply to disputes between partners
What are the characteristics and management of a limited partnership (what are the rights of limited and general partners)?
- Limited partners make contribution (cash, property, services) - General partners run the business (can also contribute capital) - Limited partners can bring derivative suits - Limited partners can typically access "books and records" - Dissolution can be accomplished by the parties, by operation of law, or by order of a court - Limited partners have the right to a share of profits and a return of capital
How are corporations created? Are corporation regulations uniform?
- Most states have a corporations statute that governs how corporations are created and includes many other req + rules for corps - Statue enacted pursuant to states' police power - No truly uniform corporations statute (rules vary from state to state)
How is an LLC created externally? What info is needed to do this?
- Must file Articles of Organization with Secretary of State - Information needed: (1) name (incl. "LLC"), (2) purpose, (3) duration, (4) registered agent, (5) principal office
How are LLPs created?
- Must register with Secretary of State - Include LLP in entity's name - Need LLP Agreement
What are the 6 forms of business partnership? Categorize them based on their limitations.
- No limitations on owner's personal liability for company debts: sole proprietorship and general partnership - Some limitations on owner's personal liability for company debts: limited liability partnership (LLP) and limited partnership (LP) - Owners' personal liability for company's debts limited to their investment in the firm: limited liability company (LLC) and corporation
What is a sole proprietorship? What are its advantages and disadvantages? What are the common industries of this form of ownership?
- One owner only (but may have employees) - Advantages: No costly formalities or paperwork, sole owner controls all decisions, owner receives all profits (taxed only as personal income not at company level) - Disadvantages: investment is limited by the resources of the owner, owner is subject to unlimited personal liability for the company's debts (cannot limit this risk) - Common industries: retail, service businesses, agriculture
What is original jurisdiction? What is appellate jurisdiction?
- Original jurisdiction: Courts hear the original proceedings in a case (most typically, a trial where evidence is presented) - Appellate jurisdiction: When courts review the work of the lower courts (these courts don't hear evidence) -
Loper Bright Enterprises v. Raimondo
- Overview: A group of commercial fishermen who regularly participate in the Atlantic herring fishery sued the National Marine Fisheries Service after the Service promulgated a rule that required industry to fund at-sea monitoring programs at an estimated cost of $710 per day. - No ruling yet: this case is currently under review
What was re Facebook, Inc. Section 220 Litigation?
- Overview: A privacy suit brought against Facebook to challenge the company's use of cookies to track Facebook users even after they have logged out of the platform - Effect: A shareholder must simply show a "credible basis" for an inference of wrongdoing to be permitted to inspect books of corporation
Byker v. Mannes (and its effect)
- Overview: Byker and Manne orally agreed to work together but their business failed causing them to pay up. Byker wanted to equalize their payments to the court but Manne refused, Byker sued to recover the money. - Ruling: Byker sued Mannes to recover the money, arguing that there was a general partnership underlying all of their business activities. Mannes contended that they had never actually intended to become partners. The trial court found in favor of Byker. - Effect: to find that a general partnership exists, intent to create a general partnership is not required and conduct of parties can be evidence of a general partnership
Auriga Capital Corp v. Gatz Properties, LLC
- Overview: Gatz Properties, LLC sold a company to themselves at an unfair price through a flawed auction that they controlled. - Rule: ruling for minority members where manager breached fiduciary duty of loyalty
What are the 3 types of corporations?
(1) Close corporations - One/small # of shareholders - Stock not traded publicly - Often restrictions on sale of stock so owners can control ownership (2) S-Corporations - Eliminates two-level taxation - Limited to 100 shareholders (only indiv, certain trusts) - Must be domestic (ex: operating in the state where it is incorporated) - Must have only one class of stock (3) B-Corporations - B-corps set a goal to create a public benefit and profit - B-corps report on their public benefit progress to shareholders - Shareholders can bring a derivative suit to enforce promises
What does the distribution of assets look like in a general partnership (after winding up period)?
- (1) Creditors of the company are paid - (2) Advances paid by general partners are repaid - (3) Contributions paid by general partners are repaid - (4) Remaining assets are divided equally among the general partners, or pursuant to the partnership agreement
What is NOT a violation of a general partner's duties pursuant to RUPA?
- (1) Transacting personal business with the general partnership, so long as the terms are consistent with fair market value - (2) Engaging in conduct on behalf of the partnership that benefits the general partner personally, so long as conduct is otherwise allowable
What is case law? What are its roles?
- (1) statutory interpretation: where laws passed by legislatures are unclear, courts help us interpret them - (2) creating precedent: once an appellate court decides a particular issue, the decision becomes "the law" on that issue - (3) developing common law: common law is a body of est legal principles, created in court decisions, that addresses long-standing issues
What is the difference between B-Corporations and Nonprofit Corporations?
- A benefit corporation can distribute its profits to its shareholders in the form of dividends. - A non-profit corporation has to use its profits to further its charitable purpose. - Nonprofit corporations are also tax exempt while B-Corps have to pay taxes
What is arbitration?
- A binding form of ADR that requires the parties to appoint one or more third parties to decide their dispute - Parties agree to arbitration by contract - Arbitration in US dates back to colonial times - Many companies doing business internationally utilize international commercial arbitration
What are derivative suits? Where does the money won go?
- A lawsuit brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director. - Any money won goes to the corporation...not the individual shareholder (idea is that is will eventually trickle down to the shareholder)
What is the difference between LPs and LLPs?
- A limited partnership is a type of partnership that consists of at least one general partner and at least one limited partner. - A limited liability partnership does not have a general partner, since every partner in an LLP is given the ability to take part in the management of the company.
What is mediation?
- A non-binding ADR process whereby disputing parties hire a neutral third party to facilitate resolution - Mediators are typically trained in negotiation methods - Shuttle diplomacy - Mediators can find new "currencies" and improve communication between disputing parties
What is negotiation?
- A process whereby the parties to a dispute meet and try to resolve it - Least formal method of ADR - Commercial contracts sometimes mandate negotiation as a first step to attempt to avoid more formal dispute resolution
What is preemption? What are the different kinds of preemption?
- A rule when federal and state legislatures pass a statute on the same subject. - Assuming that the statute was properly within the scope of Congress' authority, the federal law preempts the state law pursuant to the Supremacy Clause - Express preemption: Congress expressly declares in a statute that state law is preempted - Implied preemption: No express preemption, but federal and state law conflict - Field preemption: When federal regulation is so extensive on a particular subject that it is said to occupy "the field"
What is the Administrative Procedure Act (APA)?
- APA = the most important statute governing administrative agencies - Requires reasoned decision-making supported by an explanation for agency action
What are the ways that corporations can be dissolved? What happens when the corporation is dissolved?
- Administratively: for failure to keep up with filings + fees w the state - Judicially: deadlocked - Voluntarily: according to Aol - Once dissolved, owners lose protections + corporation does not exist as a legal entity
What is a corporation? Who owns a corporation?
- An artificial person created by government grant and given certain powers - Owners are called shareholders
What rights do general partners miss out on?
- Compensation - Limited liability (RUPA: Partners are jointly and severally liable for both contracts and torts but partnership property must be exhausted before reaching partners' assets)
How do general partnerships form? What determines if the partnership exists?
- Created by agreement (written, oral, or by conduct) - Where no agreement or agreement is silent on certain terms, state partnership law (UPA/RUPA) fills in the gaps - Not required to make filings with state to form general partnership - A general partnership exists depending on the substance of the relationship (not what the parties have called it or their intent) - Right to control business is indicative of a general partnership - Sharing profits and losses is also indicative - Not all partners need to contribute capital - If someone receives payments not tied to profits (such as a salary), then that person is not a general partner
What is dissolution? What is dissolution like in terms of general partnership? What happens if the business cannot carry on after dissolution?
- Dissolution = the change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business - Does not necessarily mean that the business ends, if the partnership agreement permits the other partners to continue after buying the former partner out (RUPA uses the word disassociation to refer to this situation) - If the business cannot carry on, then dissolution is followed by a winding-up period, after which the general partnership ceases to exist - During winding up, a general partner may only take actions to wind up the general partnership
South Dakota v. Wayfair, Inc.
A 2018 U.S. Supreme Court decision eliminating the requirement that a seller have physical presence in the taxing state to be able to collect and remit sales taxes to that state. It expanded states' abilities to collect sales taxes from e-commerce and other remote transactions.
What is a statue?
A legislative act, passed by either the federal or a state legislature
Dept. of Commerce v. New York
Agency decision to include citizenship question on census was substantively invalid because it lacked a reasonable explanation
What is the anti-dilution right?
If a new share issuance is authorized, shareholders may have the right to maintain the same percentage of the stock that they owned before
Huran v. Rashid (and its impact)
- Overview: In 2001, Mohammed Harun, someone in the restaurant business, and Sharif Rashid, a technical analyst, became acquainted. In November 2008, Harun was interested in opening a newrestaurant in Irving, Texas; however, Harun did not have the financial resources to get the business of the ground. Harun approached Rashid to see if he was interested in funding the operation. Rashid was interested and invested $45,000 of his savings and took a personal loan of $15,000. Shortly after, Harun removed Rashid as a signatory on Spice-N-Rice's bank account as well as blocked Rashid's access to the account and restaurant's premises.On August 21st, 2021, Rashid filed a lawsuit against Harun alleging existence of a partnership between the two to operate Spice-N-Rice. - Ruling: Court Affirmed Finding That An Oral Partnership Existed And That A Partner Breached Fiduciary Duties - Effect: Listed factors to be considered to determine whether general partnership exists)
Facebook, Inc. v. Superior Court
- Overview: Supreme Court addressed the propriety of a criminal defense subpoena served on Facebook seeking restricted posts and private messages of one of its users, who was a victim and critical witness in the underlying attempted murder prosecution, holding that the trial court erred in denying Facebook's motion to quash the subpoena. - Ruling: several factors must be considered before allowing access to social media accounts in a criminal case
GMF ELCM Fund L.P. v. ELCM HCRE GP LLC, Del. Ch. 2019
- Overview: The Delaware Court of Chancery granted a petition for dissolution of a Delaware limited partnership, ELCM Healthcare Real Estate Fund LP (the "Fund"), because the principal of the general partner, Andrew White, was unwilling or unable to conduct the business of the Fund to fulfill the purpose set forth in its limited partnership agreement. - Effect: court ordered dissolution at request of investors where general partner refused to carry on business
Crozier v. Sauers
- Overview: The plaintiff, Crozier, sued his former attorney, Sauers, alleging that Sauers had committed malpractice in handling a prior legal matter. Specifically, the issue at hand involved the attorney's failure to timely file a notice of claim, which is a prerequisite for suing a municipal entity in New York. - Effect: funds loaned to single-shareholder corporation were for corporate purposes; shareholder not liable
What is Shoaf v. Warlick?
- Overview: Warlick, Jr., former president, chief executive officer and stockholder of Coke-Anderson. Appellants alleged the respondent breached a fiduciary duty and received an unlawful premium in the sale of his majority interest in the Coke-Anderson stock to the Coca-Cola Bottling Company of Asheville, N.C - Impact: majority shareholder can sell stake in corporation for a premium
What are LLP owners called? How many must there be?
- Owners are called partners - There must be at least two - Owe fiduciary duties
What are the stages of a lawsuit?
- Pre-trial: complaint, service of process, answer or motion to dismiss, discovery, motion for summary judgment, designation of experts - Trial: jury selection (juror voir dire), opening statements, presentation of evidence through lay and expert witness, closing arguments, jury instructions and verdict - Post-trial: appeal, judgment, execution of judgment
What is the difference between promoters and incorporators?
- Promoters are focused on fundraising and business for corporation - Incorporators are focused on the application for incorporation - In other words: A promoter would perform the conduct required for incorporating the business venture. The person signing the certificate of incorporation would be named the incorporator.
How do you get to negotiation? Is it confidential? What control do the parties have? How do you enforce an agreement reached reached in negotiation? What are the advantages and disadvantages of negotiation?
- Set by agreement (implicit or explicit) - Confidential if the parties agree - Settlement communications are confidential - Parties control the process and resolution - The agreement is enforced through a contract (or settlement agreement) that is executed and enforced just like any other contract - Advantages: party control, inexpensive, fast - Disadvantages: no neutral third party to facilitate discussions between disputing parties, indefinite process, does not guarantee resolution
What kind of control do shareholders have over corporations? What are the 5 rights of shareholders?
- Shareholders have rights in a corporation because they own the corporation. BUT, they have indirect control over the corporation - (1) Voting Rights (right to vote at shareholders' meetings) - (2) Share-related rights (right to transfer shares unless restricted) - (3) Inspection Rights (shareholders can inspect the books of the corporation, subject to good faith/proper purpose requirements) - (4) Dividends and Capital Distributions (shareholders have a right to dividends when they are declared + shareholders have a right to capital distributions following a dissolution of a corporation) - (5) Derivative Suits (when the corporation has the right to sue its management or a third party but refuses to do so, shareholders may bring the action in the name of the corporation)
What is police power?
- States may regulate to protect the general welfare, health, safety, and morals of the people - This is the authority pursuant to which most state regulations have passed
What are the two main checks on an agency's power?
- Sunshine Act: an open meeting law - Freedom of Information Act: makes agency records available to citizens upon request
What is taxing power?
- Taxes must be apportioned (a business cannot be taxed for its revenues in all 50 states) - Company must have connection to state in order to be taxed by state, but no physical presence in state is required
Kansas v. Garcia
- The case concerned whether it was lawful for a State to enforce laws criminalizing the making of fraudulent representations by aliens who were not authorized to work in connection with obtaining a job - State prosecution based on information contained in tax withholding documents not preempted by federal regulation preventing use of information on I-9 forms
What is the privledges and immunities clause?
- The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states - States must allow citizens of other states to do business in their state
Who does a company's lawyer represent?
- The company (not the individual employees) - This becomes an issue when the company's interests diverge from an employee's interests - Company attorneys may interview employees, but those communications are not necessarily confidential
What can agency action be reviewed for?
- The denial of due process during a hearing - Whether the agency acted beyond the scope of its authority (ultra vires) - Whether the agency's decision was arbitrary and capricious - Whether the agency's interpretation of a law is without reasonable bias (The Chevron Doctrine requires courts to defer to an agency's reasonable interpretation of an ambiguous law or where the law is silent)
What are the three important things to remember about limited partnerships?
- The identity of limited partners stays confidential - If you don't file the certificate, all participants are treated as general partners - "Limited Partnerships" need to be in the entity's name
What is the attorney-client privilege? What are the 3 exceptions to this privilege? What is the purpose of this privilege?
- The right to keep communications with an attorney private and confidential - Three exceptions: (1) waiver (including "advice of counsel" defense/at-issue waiver), (2) crime-fraud, (3) self-defense - Purpose is to encourage open communication between attorney and client in order to help client understand the law and attorney advocate on behalf of the client
What is the equal protection clause?
- Though the Equal Protection Clause refers to states (not the federal government), the Supreme Court has held that the federal govt may not deny its citizens equal protection - Prevents govt from treating people differently when there is no reasonable ground for doing so
What kind of courts do we have in the US? What are the courts within those systems?
- We have federal and state courts - Within those systems we have trial and appellate courts
How do you get to mediation? Is it confidential? What control do the parties have? How do you enforce an agreement reached in mediation? What are the advantages and disadvantages of mediation?
- You get to mediation by agreement, rarely court-ordered - Yes, mediation is confidential by statute in many places - Parties agree to engage in the mediation process, which is then controlled by mediator - Parties control resolution - Typically, the mediator or the parties will draft a contract or settlement agreement - Advantages: relatively low cost, speed, presence of trained facilitator can ease tensions - Disadvantages: Does not guarantee resolution
What is alternative dispute resolution (ADR)? Why do people choose ADR over litigation? How common is it?
- an umbrella term for several different methods of resolving disputes outside of litigation - a private form of dispute resolution - gives the parties the freedom to choose how their dispute is decided - people choose it because it can be (1) faster, (2) lower cost, (3) customized, (4) confidential, (5) easier enforcement - it is very common: 90% of Fortune 1000 companies used at least one form of ADR over the course of a year
What are the four places that law comes from?
- cases: a decision written by a judge deciding a dispute (there are federal and state cases) - the US constitution: constitution sets forth basic rights that cannot be taken away by other laws (also provides the framework for other laws) - statutes: laws that Congress and state legislatures pass - regulation: drafted by administrative agencies through a rule making process
What are the 7 parts of a case?
- citation: when and where the case was decided - facts: what happened between the parties - procedural history: what happened in the case up until this point - issue: what specific question does the court have to decide (sometimes there are a few) - rule: what statutes, case law, contract language, etc. are relevant and needed to decide this issue? Often includes a legal standard - analysis: where the court applies the rule to the facts of the case - holding: the court's decision
What are the differences between civil and criminal cases?
- criminal laws address wrongs against society - civil laws address the rights of one person vs. another person - criminal: govt prosecutes civil cases - civil: private parties (and more rarely the govt) prosecute civil cases - criminal: punishment of fines/jail times - civil: penalty is damages to the harmed party
What are limited partnerships? How are they taxed? When are they usually enacted?
- partnership formed by general partner(s) and limited partner(s) - taxed only as personal income - LP structure often used for investment vehicles because of tax benefits (general partner in this case is typically a corporation)
What are rights and duties?
- right = the ability to require another person to do or not do something - duty = an obligation imposed on someone to do or not do something
What kind of act regulates limited partnerships?
Revised Uniform Limited Partnership Act
What are corporate bylaws?
Rules enacted by a corporation to govern corporate affairs and the roles of shareholders, directors, and officers
What are the differences between a general partner and a limited partner in a limited partnership?
General Partner - Liability not limited - Manages the business - Can be one or several - Public face of LP Limited Partner - Liability limited to investment - Does not manage the business - Can be one or several - Behind the scenes
PNC Bank NA v. Farinacci
- Facts: PNC Bank sued two of the eight general partners of Washington Square Enterprises, Farinacci and Gruttaduaria, for the unpaid balance of their partnership's business line of credit. The trial court entered judgment in the amount of $4,190.33 plus interest against each of the two partners. The trial court determined that the 8 general partners were jointly liable for the debt to PNC. In addition, it issued a separate judgment against Farinacci and Gruttadauria in the amount of one-eighth each of the entire debt of $33,522. PNC appealed, contending that the trial court should have found the partners jointly and severally liable or that the trial court should have apportioned the debt according to the percentages of each partner's ownership interest in the partnership (rather than dividing debt equally) - Ruling: The trial court properly decided the case, holding the two partners jointly liable (debt should be shared equally among all general partners) - Effect: General partners are held jointly liable for company's debt where UPA, not RUPA controlled (under RUPA, they are jointly and severally liable)
Omnicron v. Giannetti Investment Co. (and what precedent did it set?)
- Facts: Silvio Giannetti and his daughter and son-in-law, Anne Marie and Jerry Pruzinsky, are partners in a general partnership known as Giannetti Investment Company (GIC), which owns and operates Brougham Manor Apartments. Jerry entered into an access agreement with Omnicom, a provider of cable TV, giving Omnicom the right to enter Brougham Manor for purposes of installing, maintaining, and promoting cable service. Some time later, when he learned of the contract, Silvio denied Omnicom access to the property. Omnicom was unable to repair a signal leakage problem and was forced to discontinue cable service. Omnicom sued GIC for breach on contract. GIC said that Jerry did not sign the agreement in the partnership name and thereby failed to bind GIC. - Ruling: Judgment for Omnicom. A contract executed in the name of a partner is binding on the partnership. Jerry executed the contract in the usual course of GIC's business, for it is a typical activity for an apartment complex to contract for cable TV. - Precedent: a contract executed in normal course of apartment complex's business is binding on the general partnership
Patel v Patel
- Facts: The Patel family, consisting of parents and a son, was a partnership that owned and operated a motel. The parents made a contract to sell the motel, but thereafter the son refused to sell. He claimed that the contract of sale was not binding. - Ruling: Judgment for the son. The motel was not an asset held by the partnership for sale. It was an asset that was essential for the running of the partnership/business. Accordingly, neither one partner nor a majority had implied authority to sell the motel. To the contrary, the unanimous consent of all partners was required for the sale of the motel because such a sale would make it impossible to continue the partnership business. - Precedent: a general partnership that owned and operated a motel required express authority to sell the motel, since a sale would make it impossible to continue the business
What cases can go to federal court as opposed to state court?
- Federal courts can hear diversity cases and disputes raising federal questions - This is the federal court's subject matter jurisdiction
What is the due process clause?
- Fifth Amendment: "No person shall be deprived of life, liberty, or property, without due process of law" - Includes protection of fundamental rights - Quasi-judicial proceedings satisfy the due process requirement
What are the two kinds of challenges that a part of jury selection?
- For-cause challenges - Peremptory challenges
How are LLCs managed?
- Freedom of contract leads to flexibility in drafting Operating Agreement (no writing necessary, can "contract around" fiduciary duties) - Operating Agreement sets forth specific management authority - Profits and losses are shared according to terms of Operating Agreement (contributions go back first) - Typically dissolves upon consent of members or due to death of member
What does the liability look like for a limited partnership?
- General partners are liable for the company's debts, limited partners can only lose their investment in the company - Limited partners lose their liability shield if they participate in running the business (except in certain limited circumstances) - General partner can limit its liability by incorporating
What must general partners do externally to form an LP? What should this certificate include?
- General partners must execute a Certificate of Limited Partnership and file it with the Secretary of State - Certificate must include: (1) LP name and address, (2) name and address of each general partner, (3) latest date on which LP is to dissolve, (4) registered office and service agent
What is the definition of a general partnership? What are its key features?
- General partnership = a voluntary association btwn two or more persons to operate a business as co-owners for profit - The owners are called general partners - Defining characteristics: (1) voluntary, (2) owners contribute capital/services/both, (3) owners transact company business for profit, (4) owners share in profits (and losses), (5) owners share control - Owners are subject to unlimited personal liability for the company's debts (can be named individually in a lawsuit against the company) - Taxed as personal income: not at the company level
How do parties get to arbitration? Is it confidential? What control do the parties have? How do you enforce the arbitrator's decision? What are the advantages and disadvantages of arbitration?
- Get to arbitration by agreement - Arbitrator must keep proceedings confidential - Parties can agree to confidentiality - Parties agree to submit to the arbitration process, which is then controlled by the arbitrator - Parties do not control outcome - Decision is enforced by the Federal Arbitration Act + state arbitration statutes - Advantages: faster than litigation, ease of enforcement, can choose "judge" - Disadvantages: narrower right to discovery, limited right to appeal, expensive
What is Congress' commerce power? How does this clause serve as a limitation on state powers?
- Gives Congress the power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes - Originally interpreted narrowly, in the 1930s, the "interstate commerce" began to be defined much more broadly as interstate transportation became more common and accessible - The clause also prevents states from imposing regulations that interfere with interstate commerce - States can't levy taxes that discriminate against interstate commerce
What is the exception to the fact that submitting a dispute to ADR is almost always done by agreement?
Exception is court-ordered ADR, where the parties are compelled to participate in the ADR process, but they don't need to come to a resolution
What are the multiple roles of administrative agencies?
Legislative - Agencies enact regulations pursuant to enabling legislation - Regulations fill gaps left in statutes by Congress - Rule making process requires study, drafting, publication, public comment Executive - Agencies can investigate and bring actions against people who violate the law - Subject to the constitutional limitations we discussed last time Judicial - Administrative agencies can hold hearings as to whether a violation has occurred - Presided over by administrative law judge (ALJ) whose decision is appealable to court - Some estimate that 90% of enforcement cases that the SEC sends to its own ALJs (as opposed to courts) are decided in the agency's favor
What is litigation?
Litigation: The process of resolving disputes in court
Rowe v. New Hampshire Motor Transport Assoc
Overview: In an effort to address the problem of tobacco use by minors, the Maine legislature passed the Tobacco Delivery Law, which imposes requirements on air and motor carriers that transport tobacco products. One provision of the law requires tobacco retailers to only use carriers that verify the age of each tobacco purchaser, and another provision requires that carriers ensure that no tobacco is shipped to unlicensed retailers. Ruling: Maine regulation requiring Maine license to accept order of tobacco products improperly gave an economic benefit to in-state retailers
When are shareholders granted the privilege of limited liability?
Privilege of limited liability generally attached once AOL are filed
What do states typically reserve the LLP structure for?
Professions requiring a license (ex: lawyers, accountants, certain types of agencies)
What is the liability of shareholders in an LLC?
Shareholders are insulated from liability for the corporation's debts (even if there is only one shareholder!)
What is Congress' taxing power?
Taxes must be imposed for a public purpose
What is law?
the rules and regulations made and enforced by government that regulate the conduct of people within a society
